The Secret Reason Many Fast Food Dining Rooms Won't Open Anytime Soon
If you've grown tired of solely relying on take-out, drive-thru, or delivery for your favorite fast-food meal, know it may take a while before you can eat inside a fast-food restaurant. Turns out, many fast-food chains plan on keeping their indoor dining areas closed because it helps their bottom line.
The Wall Street Journal reports that national fast-food chains have been seeing profits return to where they were before the pandemic hit, and in some cases, climb even higher. This is because of how these restaurants responded to COVID-19 safety measures by offering takeout, delivery, or drive-thru options only, and keeping their costs of operation much lower as a result.
This is good news for an industry hit extremely hard in the earliest days of the pandemic. Only four national chains reported profits in the first quarter of 2020, but many companies quickly learned that fewer employees needed to clean and maintain dining areas led to direct financial benefits of keeping dining rooms closed.
That's why many chains are in no rush to reopen areas for eat-in diners anytime soon. "For quick-service restaurants, they don't want to reopen their dining rooms because this drags down profitability and increases costs," Andrew Charles, an analyst at investment bank Cowen Inc., told WSJ.
According to one fast-food executive, the financial benefits of closing dining rooms and increasing delivery and drive-through options were well-recognized before the coronavirus became a public health crisis. "COVID acted as an accelerator for some of the trends that we already identified in our strategy," said Matthew Dunnigan, the chief financial officer of Restaurant Brands International Inc. (RBI), the owner of the Burger King, Tim Hortons, and Popeyes Louisiana Kitchen brands. (Related: 23 Things Fast-Food Chains Aren't Bringing Back.)
Dunnigan revealed that roughly a third of RBI's dining rooms have reopened, and added that the company will eventually reopen dining rooms for all locations. However, RBI is seeing higher average revenue per order in its drive-through and delivery business compared to dine-in orders.
It's reasonable to expect many fast-food chains to reopen dining areas, especially as the COVID-19 virus is managed. But consumer behavior brought about by the pandemic—and the increased profitability that has come with it—will likely also lead to many drive-through and delivery-only locations. For proof, check out these 4 fast-food drive-thrus you'll be seeing everywhere soon.
